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Financial institutions use derivatives instruments to hedge their assetliability risk exposures. The financial institutions` goal is to reduce the value of their net worth that

Financial institutions use derivatives instruments to hedge their assetliability risk exposures. The financial institutions` goal is to reduce the value of their net worth that is at risk due to adverse events.

What are the reasons why a financial institution may choose to hedge its portfolio selectively?

Substantiate your response with examples.

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